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Court Affirms Default Judgment Against A Foreign Corporate Fiduciary Because Service Was Proper Under The Texas Estates Code

In United States Bank Nat’l Ass’n v. Moss, U.S. Bank (USB) sought to vacate a default judgment in an underlying suit involving title to real property through a bill of review based on allegedly improper service under the Texas Estates Code. No. 05-19-00223-CV, 2020 Tex. App. LEXIS 4030 (Tex. App.—Dallas May 21, 2020, no pet. history). In the underlying case, a home owner sued the lender, who was assigned the deed of trust as a trustee, alleging that the lender’s claims were barred by the statute of limitations. After the trial court entered a default judgment for homeowner, the lender filed a collateral bill of review action to set it aside, claiming that service was not appropriate. The trial court granted summary judgment for the homeowner, and the lender appealed.

The court of appeals first discussed service of process under the Texas Estates Code and the Texas Civil Practice and Remedies Code:

Under the Texas Estates Code, a foreign corporate fiduciary is defined as a “corporate fiduciary that does not have its main office or a branch office in [Texas].” Tex. Est. Code § 505.001. A foreign corporate fiduciary “may be appointed by will, deed, agreement, declaration, indenture, court order or decree, or otherwise and may serve in this state in any fiduciary capacity, including as: trustee of a personal or corporate trust.” Tex. Est. Code § 505.003(a). A foreign corporate fiduciary must appoint the secretary of state as its agent for service of process and “[s]ervice of notice or process . . . on the secretary of state as agent for a foreign corporate fiduciary has the same effect as if personal service had been had in [Texas] on the foreign corporate fiduciary.” Tex. Est. Code §§ 505.004, 505.005. “[T]he appointment of the secretary of state as the agent to receive service of process . . . is limited to matters related to an estate in which the foreign bank or trust company is acting as an executor, administrator, trustee, guardian of the estate, or in any other fiduciary capacity.” Bank of N.Y. v. Chesapeake 34771 Land Trust, 456 S.W.3d 628, 635 (Tex. App.—El Paso 2015, pet. denied); see also Bank of N.Y. Mellon v. NSL Prop. Holdings, LLC, No. 02-17-00465-CV, 2018 WL 3153540, at *5 (Tex. App.—Fort Worth 2018 no pet.) (mem.op). The Civil Practice and Remedies Code provides that service may be made on a financial institution by “serving the registered agent of the financial institution; or if the financial institution does not have a registered agent, serving the president or branch manager at any office located in this state.” Tex. Civ. Prac. & Rem. Code § 17.028(b). USB’s status as a foreign financial institution is irrelevant to the statute’s application. See Bank of N.Y. Mellon v. Redbud 115 Land Tr., 452 S.W.3d 868, 871 (Tex. App.—Dallas 2014, pet. denied) (nothing in § 17.028 limits its application to Texas financial institutions).

Id. The court of appeals held that these two statutes do not conflict: “Both statutes permit service on the secretary of state, and § 505.005 applies specifically to foreign corporate fiduciaries when they are sued in that capacity.” Id. The court then held that the lender was properly served by the secretary of state and was negligent in not keeping its designee for receiving process updated.

Finally, the court held against the lender on three issues: it held that the plaintiff’s pleading was sufficient to support service under the Texas Estates Code, service on the lender’s registered agent (the Texas Secretary of State) was appropriate, and the Whitney Certificate from the Secretary of State was sufficient to show proper service. The court affirmed the trial court’s summary judgment for the homeowner

© 2020 Winstead PC.National Law Review, Volume X, Number 156

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About this Author

David Johnson Financial Litigator Winstead Law Firm

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the Texas Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. 

David's financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class...

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